Four of the largest U.S. banks said their profits grew by double-digits last quarter, as a healthier U.S. economy has helped reduce the number of loans in default or that the bank won’t likely recoup. The results for Citigroup, Bank of America, Wells Fargo and Morgan Stanley also show that all four benefitted from various one-time boosts to their profits.
The only headwind facing the big Wall Street banks appears to be low interest rates, which have put some pressure on banks’ abilities to grow their profits. Some of them, like Bank of America, are making up for it by lending significantly more than they did in the early months of the pandemic, a sign of confidence in the U.S. economy.
Bank of America said net income rose 58% to $7.26 billion, or 85 cents a share. That topped the estimates of Wall Street analysts who were looking for earning per share of 70 cents, according to FactSet. Meanwhile Wells Fargo posted a 59% jump in profit from a year earlier.
Both banks benefitted from being able to reverse some funds set aside early in the pandemic in case of loan defaults. These billions of dollars of potentially troubled loans have been moved back on to the banks’ “good” side of their books, which has resulted in one-time bumps to bank profits.
Wells and BofA’s results echoed results from JPMorgan Chase, which also saw its profits rise sharply last quarter due to the release of more loans from its troubled loan portfolio.
Wells, the country’s biggest mortgage lender, said its net interest income is “stabilized,” thought it was 5% lower than in the same period last year.
The bank released $1.7 billion from its loan-loss reserves. Wells had set aside $8.4 billion to cover potentially bad loans in last year’s second quarter at the peak of the pandemic when millions of Americans lost their jobs and the economy effectively collapsed.
Kyle Sanders, an analyst at Edward Jones that covers Wells Fargo, said the “results were still solid and reflective of improving economic conditions.”
There is not an unending supply of bad loans banks can tap into to boost their profits, however, and at some point investors are going to want to see these banks post profits driven by growing their businesses or charging more for loans. Interest revenue at both Wells and BofA fell from a year ago, due to the Federal Reserve keeping interest rates at ultra-low levels.
In contrast to its rivals, Bank of America saw its interest income go up in the quarter compared to a year earlier, partly due to a pickup in lending activity. The bank’s loans grew by $21 billion from the previous three months, excluding the Paycheck Protection Program for small businesses. That’s a significant boost in lending over a short period of time.
Several area banks and banks with a presence in the North Texas area have released their Q3 earnings. Here’s a roundup:
Regions Financial: Q3 Earnings Snapshot
BIRMINGHAM, Ala. (AP) _ Regions Financial Corp. (RF) on Friday reported third-quarter profit of $651 million.
The Birmingham-based bank said it had earnings of 65 cents per share. Earnings, adjusted for non-recurring costs, came to 66 cents per share.
The results surpassed Wall Street expectations. The average estimate of 10 analysts surveyed by Zacks Investment Research was for earnings of 53 cents per share.
The holding company for Regions Bank posted revenue of $1.66 billion in the period. Its revenue net of interest expense was $1.61 billion, also topping Street forecasts. Seven analysts surveyed by Zacks expected $1.56 billion.
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Independent Bank Group: Q3 Earnings Snapshot
MCKINNEY, Texas (AP) _ Independent Bank Group Inc. (IBTX) on Monday reported third-quarter profit of $52.3 million.
The McKinney-based bank said it had earnings of $1.21 per share. Earnings, adjusted for non-recurring costs, came to $1.22 per share.
The results missed Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of $1.31 per share.
The bank holding company posted revenue of $160.9 million in the period. Its revenue net of interest expense was $145.5 million, which also did not meet Street forecasts. Three analysts surveyed by Zacks expected $148.8 million.
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Simmons First National: Q3 Earnings Snapshot
PINE BLUFF, Ark. (AP) _ Simmons First National Corp. (SFNC) on Tuesday reported third-quarter net income of $80.6 million.
The bank, based in Pine Bluff, Arkansas, said it had earnings of 74 cents per share.
The results beat Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 58 cents per share.
The bank holding company posted revenue of $212.5 million in the period. Its revenue net of interest expense was $193.8 million, also topping Street forecasts.
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Southside Bancshares: Q3 Earnings Snapshot
TYLER, Texas (AP) _ Southside Bancshares Inc. (SBSI) on Tuesday reported net income of $29.3 million in its third quarter.
The Tyler-based bank said it had earnings of 90 cents per share.
The holding company for Southside Bank posted revenue of $67.8 million in the period. Its revenue net of interest expense was $64.4 million, which beat Street forecasts.
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UMB: Q3 Earnings Snapshot
KANSAS CITY, Mo. (AP) _ UMB Financial Corp. (UMBF) on Tuesday reported third-quarter profit of $94.5 million.
The bank, based in Kansas City, Missouri, said it had earnings of $1.94 per share. Earnings, adjusted for non-recurring costs, came to $1.95 per share.
The results beat Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of $1.81 per share.
The bank holding company posted revenue of $329.2 million in the period. Its revenue net of interest expense was $324.2 million, also surpassing Street forecasts. Three analysts surveyed by Zacks expected $321.6 million.
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Capital One: Q3 Earnings Snapshot
MCLEAN, Va. (AP) _ Capital One Financial Corp. (COF) on Tuesday reported third-quarter profit of $3.1 billion.
On a per-share basis, the McLean, Virginia-based company said it had net income of $6.78. Earnings, adjusted for non-recurring costs, came to $6.86 per share.
The results exceeded Wall Street expectations. The average estimate of 16 analysts surveyed by Zacks Investment Research was for earnings of $5.22 per share.
The credit card issuer and bank posted revenue of $8.21 billion in the period. Its adjusted revenue was $7.83 billion, also topping Street forecasts. Fifteen analysts surveyed by Zacks expected $7.43 billion.
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Veritex Holdings: Q3 Earnings Snapshot
DALLAS (AP) _ Veritex Holdings Inc. (VBTX) on Tuesday reported third-quarter net income of $36.8 million.
The Dallas-based bank said it had earnings of 73 cents per share. Earnings, adjusted for non-recurring gains, came to 70 cents per share.
The results beat Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 69 cents per share.
The bank holding company posted revenue of $95.4 million in the period. Its revenue net of interest expense was $86.9 million, also surpassing Street forecasts.
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Cullen/Frost: Q3 Earnings Snapshot
SAN ANTONIO (AP) _ Cullen/Frost Bankers Inc. (CFR) on Thursday reported third-quarter profit of $108 million.
The San Antonio-based bank said it had earnings of $1.65 per share.
The results surpassed Wall Street expectations. The average estimate of seven analysts surveyed by Zacks Investment Research was for earnings of $1.52 per share.
Cullen/Frost shares have climbed 46% since the beginning of the year. The stock has risen 92% in the last 12 months.
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Origin Bancorp: Q3 Earnings Snapshot
RUSTON, La. (AP) _ Origin Bancorp Inc. (OBNK) on Wednesday reported third-quarter profit of $27 million.
The Ruston, Louisiana-based bank said it had earnings of $1.14 per share.
The results beat Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 99 cents per share.
The bank holding company posted revenue of $74.7 million in the period. Its revenue net of interest expense was $68.5 million, also beating Street forecasts.
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Goosehead: Q3 Earnings Snapshot
WESTLAKE, Texas (AP) _ Goosehead Insurance Inc. (GSHD) on Wednesday reported third-quarter earnings of $4 million.
The Westlake-based company said it had net income of 19 cents per share. Earnings, adjusted for stock option expense, were 24 cents per share.
The results topped Wall Street expectations. The average estimate of five analysts surveyed by Zacks Investment Research was for earnings of 16 cents per share.
The insurance company posted revenue of $41.7 million in the period, also exceeding Street forecasts. Four analysts surveyed by Zacks expected $39.3 million.
Goosehead expects full-year revenue in the range of $149 million to $155 million.
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These stories were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on GSHD at https://www.zacks.com/ap/GSHD